RELEASE: GM Sells GMAC Stake

DETROIT - General Motors Corp. (NYSE: GM) today announced it has entered into a definitive agreement to sell a 51-percent controlling interest in General Motors Acceptance Corp. (GMAC) to a consortium of investors led by Cerberus Capital Management, L.P., a private investment firm, and including Citigroup Inc., and Aozora Bank Ltd. GM expects to receive approximately $14 billion in cash from this transaction over three years, including distributions from GMAC, with an estimated $10 billion by closing.

The transaction strengthens GMAC's ability to support GM's automotive operations, improves GMAC's access to cost-effective funding, provides significant liquidity to GM and allows GM to continue to participate in the profitability of GMAC over the long term through its 49-percent ownership stake.

"We look forward to working with Cerberus to maintain and grow GMAC's traditional strong performance and contribution to the GM family," said GM Chairman and Chief Executive Officer Rick Wagoner. "This agreement is another important milestone in the turnaround of General Motors. It creates a stronger GMAC while preserving the mutually beneficial relationship between GM and GMAC. At the same time, it provides significant liquidity to support our North American turnaround plan, finance future GM growth initiatives, strengthen our balance sheet and fund other corporate priorities.

"Over the last nine months we have been aggressively implementing our North American turnaround plan," Wagoner said. "We've made some big moves, such as the health-care agreement with the United Auto Workers union; the manufacturing capacity plan; changes to our salaried health-care and pension plans; an accelerated attrition plan for hourly employees; and a complete overhaul of our marketing strategy. These bold initiatives are designed to immediately improve our competitiveness and position GM for long-term success and today's transition is a further step in that direction."

The GM Board of Directors approved the sale in a special meeting on Sunday which followed extensive consideration of this transaction and alternative strategies over the past several months. Speaking for the GM Board, Presiding Director George Fisher stated, "This transaction along with the other progress GM has been making on its turnaround plan, is an important milestone. While there is still much work to be done, the GM Board has great confidence in Rick Wagoner, his management team and the plan they are implementing to restore the company to profitability."

The transaction is subject to a number of U.S. and international regulatory and other approvals. The companies expect to close the transaction in the fourth quarter of 2006.

Long-Term Relationship

"We are very proud to align ourselves with an American icon like GM through GMAC, one of the most recognized and respected names in the financial services industry," said Mark Neporent, Cerberus' chief operating officer and senior managing director. "We are committed to a long-term partnership that we expect will bring sustained growth, diversity of product offerings and lasting benefits to GM and GMAC employees, dealers, suppliers, customers and other stakeholders."

"We are committed to helping GMAC compete even more effectively and continuing its tradition of strong growth and success," added Lenard Tessler, Cerberus' head of Private Equity and senior managing director. "We recognize that GM's dealers are a cornerstone for growth in this business, and we are committed to maintaining the strong support that GMAC provides to its dealer customers. Moreover, we have great confidence and respect for the people of GMAC, and look forward to the continued success of the GMAC automotive financing, mortgage and insurance, banking, and real estate services businesses around the globe."

GMAC Chairman and Chief Executive Officer Eric Feldstein, who will continue to lead the company after the equity sale, said, "This transaction begins an exciting new chapter for GMAC that will allow us to realize our strategic vision of becoming a premier global financial services company. With improved access to cost-effective funding, we will be able to provide more competitive financing to promote GM vehicle sales and to re-establish our historic trend of profitable growth across all our business sectors. GMAC is now poised to move from a defensive game plan to playing offense again, which should enable us to deliver tremendous value to our shareholders."

As part of the transaction, GM and GMAC will enter into a number of 10-year agreements under which GMAC will continue to support GM's automotive operations and provide GM and its dealers and customers with the same broad range of financial products and services it does today. Customers and dealers should continue to expect the world-class service that GMAC currently provides, and GMAC will continue to be the preferred and exclusive provider of various financial products involving GM-sponsored consumer and wholesale marketing incentives around the world. Additionally, employment levels are not expected to change as a result of this transaction. Under the agreements, GM will have an option to acquire GMAC's global automotive finance operations, under certain conditions, including an investment-grade rating at GM. This option is exercisable for 10 years after the closing of the transaction.

The $14 billion in cash that GM is to receive as part of the transaction includes $7.4 billion from the Cerberus-led consortium at closing and an estimated $2.7 billion cash distribution from GMAC related to the conversion of most of GMAC and its U.S. subsidiaries to limited liability companies. In addition, GM will retain about $20 billion of GMAC automotive lease and retail assets and associated funding with an estimated net book value of $4 billion that will monetize over three years.

GM also will receive dividends from GMAC equivalent to its earnings prior to closing, which largely will be used to fund the repayment of various intercompany loans from GMAC. As a result of these reductions, GMAC's unsecured exposure to GM is expected to be reduced to approximately $400 million and will be capped at $1.5 billion on an ongoing basis.

GM and the consortium will invest $1.9 billion of cash in new GMAC preferred equity -- $1.4 billion to be issued to GM and $500 million to the Cerberus consortium. GM also will continue to receive its 49 percent share of common dividends and other value generated by GMAC.

GM will take a non-cash pre-tax charge to earnings of approximately $1.1 billion to $1.3 billion in the second quarter of 2006 associated with the sale of 51 percent of GMAC.

Citigroup will arrange two syndicated asset-based funding facilities that total $25 billion which will support GMAC's ongoing business and enhance GMAC's already strong liquidity position. Citigroup has committed $12.5 billion in the aggregate to these two facilities. The funding facilities are in addition to Citigroup's initial equity investment in GMAC.

"Citigroup has a 90-year relationship with GM and this transaction represents both an opportunity to demonstrate our ongoing commitment to its long-term success as well as an attractive investment opportunity. We are pleased to be part of this unique and strong partnership, led by Cerberus," said Michael Klein, chief executive officer of the Global Banking Unit of Citigroup Corporate and Investment Banking.

The GMAC board of directors will have 13 members - six appointed by the consortium; four appointed by GM; and three independent members. GMAC will continue to be managed by its existing executive management.

GM expects that the introduction of a new controlling investor for GMAC, new equity capital at GMAC, and significantly reduced inter-company exposures to GM will provide GMAC with a solid foundation to improve its current credit rating. GM and GMAC expect that these actions will de-link the GMAC credit ratings from those of GM.

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